Russia’s Federal Antimonopoly Service (FAS) is taking a leading role in the development and implementation of draft changes to Russian strategic investment legislation, Moscow-based lawyers told PaRR. FAS is the Russian governmental body in charge of administrating the Strategic Investment Law (SIL).
Among other activities, it summarizes the practice of implementation of the law, issues official clarifications, prepares amendments to the law (including based on recommendations of various organizations and business entities), and implements the relevant instructions of the special Governmental Commission, said Alexander Gomonov, a partner at Baker & McKenzie. Unclear timing Changes to the SIL have been discussed for some time.
Last week, FAS head Igor Artemyev met with Russian President Vladimir Putin to discuss proposed changes. Yet, the legal community still does not have a clear understanding of when these amendments will come into force. The SIL was already far from perfect and a series of amendments have been proposed both for the law and related legislation, including the Subsoil Law, Gomonov said. This second set of amendments includes some long-discussed changes and will not be the last set of proposals, Gomonov added, because it includes only a small part of the changes that have been discussed and that are required to make the law more investor-friendly. Oleg Lovtsov, Of Counsel at the Salans law firm, said that overall, the changes are likely to be initially approved by the government and by the president. However, they also have to be formally approved by all relevant ministries and agencies and finalized as draft law, before being approved by Parliament and the Senate.
The amendments would then likely be signed into law by the Russian president. FAS seems to expect that these changes will be approved and will start working within six months, Lovtsov added. Considering that there are so many steps involved in the approval process, it is difficult to know when the amendments will come into force, lawyers said. Nikolay Voznesenskiy, the head of the Competition and Antitrust Practice at Goltsblat BLP, the Russian practice of London-based law firm BLP, suggested that the process could take up to another year.
The lawyers who spoke to PaRR did not believe that the proposed amendments were a response to a high profile FAS dispute with Norwegian-based telco, Telenor, over its attempts to control strategic Russian company Vimpelcom, one of the leading Russian telecommunications groups.
Amendments to the SIL were initiated before this lawsuit, the lawyers noted, and the telecom sector would remain strategic after these amendments, Voznesenskiy said. However, Lovtsov considered it likely that high-profile cases involving important foreign investors have accelerated this process. The amendments, as well as a dialogue between FAS and Telenor during the lawsuit settlement, show the willingness of FAS to interact with foreign investors, Nikolay Voznesenskiy said. As part of this agenda, FAS has also recently initiated liberalization of post-merger notifications applied to small and medium-sized businesses, he added. This initiative would significantly ease the M&A process for smaller deals, he added. Potential effect The lawyers said that these amendments should affect almost all industries.
However, the new legislation might influence food and beverages companies the most, because legislative changes would exclude companies involved in the use of infectious agents from the list of strategic companies, Lovtsov of Salans and Vozneseknskiy of Goltsblat said. Legislative changes would also be important for foreign companies owning 75% of a Russia company, especially with regard to the subsoil resources sector, the banking sector, and Russian companies listed abroad, Lovtsov added.
The effect of these amendments could also be questionable, according to lawyers. The success of the changes will depend on implementation. They will be efficient only if changes are not applied in an overly formalistic and restrictive way, Lovtsov said. It is very important how the new legislative changes will be interpreted and implemented by the federal commission which is responsible for strategic investments, as well as by the courts, he added. In addition, it is difficult to say if the liberalization of these rules as such will significantly improve the investment climate and increase investments into the Russian economy, Gomonov of Baker & McKenzie said.
by Natalia Lapotko in London
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